The Search Is On for Dan Donovan’s Record on Mortgage Fraud

October 28, 2010

Would-be state Attorney General Dan Donovan says that the reason he hasn’t had any public corruption cases as Staten Island District Attorney, is that the borough’s too small to have its very own corrupt officials. The Voicepointed out that for years you could walk into restaurants in Richmond County and spot politicians dining with mobsters, which might offer some intriguing investigative trails.

But the city’s smallest borough has clearly had a bumper crop of a different kind of problem — home foreclosures. And in most urban areas, foreclosures have been accompanied by predatory lending and mortgage fraud. But, Donovan, DA since 2004, appears to have been missing in action on that front as well.

Over at City Hall News, Edward Isaac Dovere has a tough report today about trying to get Donovan’s team to talk about its record of fighting mortgage fraud — without any luck. Dovere cites a state Banking Department study this month showing that Richmond now rates 10th overall in the state in terms of foreclosure notices. In fact, it’s neck and neck with the Bronx, and five percent of local homes are facing foreclosure on the island.

Donovan agrees it’s a big deal. In the Journal-News debate last week with Democratic foe Eric Schneiderman he called it the state’s “biggest consumer fraud matter.” As for how he would handle it, he told corrections union chief Norman Seabrook on WWRL the next day that, “All you have to do is look at my record on Staten Island, how I’ve conducted myself.”

Which is exactly what Dovere tried to do. As he writes it:

“Yet when [the D.A.’s office] was asked to provide details about that record–including the number of mortgage frauds his office prosecuted, if any ADAs were tasked to the effort to combat them and what resources had been devoted to the effort–Donovan’s government office did not respond.”

That shouldn’t be a surprise. The New York Times‘ Michael Powell last year surveyed local prosecutors about mortgage fraud. He got a big shrug from Donovan’s spokesman, the same official who told the Voice that there was a local shortage of public crooks.

“Our natural inclination is that these are civil cases,” Donovan aide William Smith told the paper.

Donovan’s campaign warned Dovere that the Times story was off-base, and that a complaint letter had been sent to editors but not published. The Voice asked the campaign for a copy of said letter. The search is on for that as well.

Accompanying the Times piece was an interactive Web map showing foreclosures across the city. A look at Staten Island shows that it is overwhelmingly a phenomenon on the island’s North Shore, an area that is heavily African-American and which has often complained of getting short shrift from borough resources.

It’s not as though the issue hasn’t come up before in a political race for Donovan. The Staten Island Advance‘s political editor Tom Wrobleski reported in 2007 how Democrat Michael Ryan, running for Donovan’s job that year, hammered at the incumbent DA over his failure to go after predatory lenders. This was before the tsunami of foreclosures started sweeping the nation, but at the time, Wrobleski wrote, Staten Island was suffering one of the state’s highest rates of default and foreclosure activity.

An assistant to Donovan said then that the office was meeting with local residents and bankers on the matter. But state senator Diane Savino echoed the criticism: “The district attorney’s failure to have a real estate fraud unit is a serious problem for Staten Island,” said Savino.

Update: Last night, Donovan’s team weighed in, eager to defend the record on the DA’s efforts to fight mortgage fraud in his home base of Staten Island. Exhibit One was the July 2009 indictment of a local couple for using their title-firm to embezzle over $1 million from vulnerable homeowners who were seeking to clear home titles and income tax liens.

Donovan’s campaign also sent along a pair of letters to the Times sent last year but unpublished in which the DA protested that he’d gotten a raw deal in the way his office was described in the April, 2009 story referenced above. Donovan wrote then that the story “grossly misrepresented” the office’s efforts on mortgage fraud. He said that prosecutors and investigators had “spent countless hours working with individuals facing foreclosure, often with positive results in keeping individuals in the homes, and holding criminal behavior accountable.”

D.A. press spokesman Bill Smith also says that he never got any inquiry regarding his office’s performance on mortgage fraud from City Hall News whose tough story yesterday also questioned Donovan’s record on mortgage and predatory lending scams. “Every press question comes to me. I was never asked,” said Smith, who said he would have cited the $1 million title scam case plus other efforts.